The government, business and labour have reached an in-principle agreement to commit to the voluntary mobilisation of savings, such as pension money, to assist Eskom and to contribute, in a structured manner, to investment in other government infrastructure.
A framework document was drafted on Thursday by a joint working group for endorsement by the social partners. It is intended that the agreement will be included in President Cyril Ramaphosa’s state of the nation address next week.
The talks are being held under the auspices of the Presidential Working Committee, a three-a-side forum set up by Ramaphosa to liaise with business and labour leaders.
The framework expressly avoids the introduction of prescribed assets, which would compel pension funds by law to invest minimum amounts in certain asset classes, such as government bonds. Instead, it proposes that the savings industry voluntarily commit to raising its investments in such projects to a significantly higher level.
The agreement arises from two high-level meetings this week at which labour federation Cosatu tabled a proposal that R250bn of pension savings managed by the Public Investment Corporation be used to pay off Eskom debt in return for an agreement that no retrenchments at Eskom take place and the utility is not privatised.
Less prescriptive agreement
The Cosatu proposal has provided the impetus for what is now a more far-reaching but less prescriptive agreement. The modalities of how this will be done, and in particular what form the support to Eskom will adopt, has still to be determined.
Cosatu’s parliamentary officer, Matthew Parks, said the federation was very pleased with the outcome. "We have a social compact agreement in which all make a contribution and in which we all recognise the urgency of investment to save Eskom," he said.
Business Unity SA vice-president Martin Kingston said business was in agreement with both the fact that Eskom needed to be relieved of a substantial amount of debt and on the importance of infrastructure investments for economic and social impact.
"On Eskom, the mechanism for how that is done has not been discussed and agreed. We are prepared to look at anything with the proviso that it does not jeopardise the financial sector, which is well regulated and well run," he said.
Parks said that the framework agreement was that both public and private funds would be mobilised to assist Eskom and wider infrastructure development. While not endorsing prescribed assets, he said, it introduced the idea of "impact investment", which would have economic and social benefits.
"This is a win for everybody. The useful thing is that it is not just about solving Eskom’s debt problem, it is also about solving infrastructure backlogs, for instance in rail and ports."
The framework includes input from business, which aims to ensure that the channelling of pension and savings funds into infrastructure will be done in such a way that perceptions of the financial sector as well managed and regulated are not undermined and that the sector is not exposed to contagion.
Kingston said it was critical that "investments are made within the mandate of the [savings] institutions and in a way that does not undermine the responsibilities of the fiduciaries or impact on the risk-related returns of investors".
Kingston said: "Show us the projects and show us there is governance in place and are well managed and we will
fund them.
"We have also said we will provide human resources to assist in doing that."
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